segunda-feira, 23 de novembro de 2015

The election of Mauricio Macri on Sunday as Argentina’s new president marks the end of an era for the country and, indeed, for the region as a whole. The bounty that accompanied the commodity boom of the past 12 years is over; leaner times will require more prudent and orthodox economic management. That is as true of the economic populism that characterised the two administrations of Cristina Fernández, Argentina’s outgoing president, as it is of other South American countries with out-of-favour leftist governments, such as in Brazil.

There will also be less populist grandstanding of the sort that Ms Fernández is known for. The centre-right Mr Macri, the son of a wealthy businessman and currently the mayor of Buenos Aires, is certainly a business-like figure. In addition, the commodity price crash has cut down to size the popular appeal of charismatic leaders, such as Ms Fernández, who modelled herself on Evita Perón.

The failures of her populist model, and a widespread weariness with her sharp-tongued and confrontational style, saw to that. The same is true of other recent political movements in South America, such as Chavismo in Venezuela, Lulismo in Brazil and perhaps Evo Morales’ rule in Bolivia. South America’s so-called “pink tide” is receding.

Still, Mr Macri’s electoral success last night is unusual. He promised change; indeed, his coalition is called “Let’s Change”. That promise helped propel him from a supposedly distant second in the polls just a month ago, to victory last night with 51.4 per cent of the vote. But change to what, exactly; in which areas; and, how?

The economy is the most pressing issue that Mr Macri must address. Inflation is running at double-digits, foreign reserves have collapsed, there are currency controls, the exchange rate is overvalued, the government is shut out of international markets by its long-running court case with holdout creditors, the central bank is printing money to finance the fiscal deficit and the domestic economy suffers from a web of domestic distortions — including energy subsidies that can shrink a household’s monthly energy bills to the price of a cup of coffee.

The hard call that Mr Macri must make is whether to address these macroeconomic distortions in one go — via a shock treatment package of the kind that Argentines have come to know and fear — or more gradually. Both courses have their merits, and Mr Macri’s team of well-regarded economic advisers is reportedly divided on the issue.

Certainly, Argentina will need to have recourse to multilateral financial support at some point — including, presumably, the International Monetary Fund, even though the IMF is indelibly associated in Argentine minds with the country’s calamitous 2002 debt default and devaluation. So far, Mr Macri has said only that he would start to remove capital controls immediately after his inauguration on December 10.

Mr Macri also faces considerable political challenges. He lacks a majority in Congress, although this may not present an insurmountable barrier to the passage of legislation.

In the lower house, with 257 seats, his coalition has more than 90 deputies, and he may be able to count on the support of over 30 dissident Peronists to carry a majority. Mr Macri also lacks a majority in the Senate. But senators traditionally take their lead from Argentina’s powerful state governors who in turn negotiate directly with the president. So, on important issues, such as solving the holdouts issue, Mr Macri should be able to build the support he needs. He has form here, too. As mayor of Buenos Aires, Mr Macri managed to pass laws through the local legislature even though he also lacked a majority there.

Perhaps the biggest area where Mr Macri needs to effect change, though, is in Argentina’s investment climate. Financial investors have cheered Mr Macri’s rise and Argentine stocks and bonds have rallied on the prospect of change. But this rally has been a trader’s plaything. Mr Macri’s job is to convert Argentina into a destination for real money and foreign direct investment rather than a hedge fund speculation. For now, that is only a hope as it would mark a decisive change for a country that, during the past 100 years, is unique in having lost its former “rich nation status”.

But even in Argentina, as Ms Fernández remarked ruefully on her Twitter account last night, “nothing lasts forever.”